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TDS on Government Grand given to NGO

Kaival Patel (Chartered Accountant) (3 Points)

26 July 2021

We are a government authority. Grant for training needs to be given to an NGO registered u/s 12AA. Will tds be deductible on payment. Kindly respond with some base

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2 Replies

CA. Sourav Sarkar (Chartered Accountant ) (24578 Points)
Replied 26 July 2021

No TDS should not be deducted as trust is registered under 12AA

CA Rashmi Gandhi (Chartered Accountant) (86220 Points)
Replied 26 July 2021

No tax should be deducted at source on grants because:

a) A grant is a gift, albeit restricted or conditional

b) NGOs exists for ‘charitable purpose’ and they are not ‘commercial providers of service/s’

c) A ‘grant agreement’ can have various conditions and stipulations as also specific expected deliverable, but, that does not make it a ‘commercial contract’.

d) NGOs under CSR Rules are “Implementing Agencies” or ‘CSR implementing partners’ of companies and not the company’s ‘commercial contractors’ or ‘vendors’